Category: Forex Zone
Crude Showing Signs of Secondary Top
300 Minute Bars
Prepared by Jamie Saettele, CMT
“After exploding through the July high of 10057, crude reversed at the June high near 10330, forming a key reversal in the process. The key reversal and the excitement that surrounded the revers…
Gold 61.8% Retracement Acting as Resistance
300 Minute Bars
Prepared by Jamie Saettele, CMT
The 3 wave rally from the September low is viewed as a correction of the decline from the record high and should be completely retraced. Gold briefly traded under channel support and the former 16…
Euro and Swissie Lead Rally, But U.S. Dollar Firmer Overall
Fundamental Headlines • Fed Dollar-Funding Cut Shows Limits of Action – Bloomberg • France-Spain Bond Sales Win Investor Backing After Bank Palliative – Bloomberg • German “No” to Euro Bonds Non-negotiable: Economy Minister – Reuters • Draghi Opens Door to Bigger ECB Crisis Role – WSJ • Euro-zone Debt is ‘Systemic Crisis’ – WSJ European Session Summary After weeks of U.S. Dollar dominance – essentially since the Japanese Ministry of Finance intervened on October 31 – the first part of this week has not been so kind. Yesterday’s price action certainly changed the FX landscape in the near-term. Still, the run up by higher yielding currencies and risk-correlated assets in recent days was not expected to last. The overnight price action suggested the U.S. Dollar may be bottoming; although we are still in the early development stages of forming a base here. Poor data out of Australia and disappointing manufacturing data from China weighed on the commodity currencies, leading the Australian Dollar lower overall against its peers. After a string of days cumulatively accruing 5.89 percent against the U.S. Dollar, the Aussie was due for a pullback. Overall, the FX Carry Trade Index – an equal-weighted basket of long-Aussie, Canadian [...]
USD To Hold Steady Ahead Of NFPs, Aussie Weakness Ahead
DJ FXCM Dollar Index The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains 0.10 percent higher from the open after moving 64 percent of its average true range, and it seems as though we will see the greenback consolidate throughout the North American trade as price action holds along the 20-period moving average. However, as the USD trades back within the downward trending channel carried over from the previous month, we may see the index track lower in December, and the reserve currency may continue to trade heavy in 2012 should the rise in risk-taking behavior gather pace. Nevertheless, as the slew of positive data coming out of the world’s largest economy limits the Fed’s scope to ease monetary policy further, easing bets for another large-scale asset purchase program could prop up the dollar next year, and we may see central bank chairman Ben Bernanke soften his dovish tone for monetary policy as the economic recovery gradually gathers pace. As the USD holds above the 50.0 percent Fibonacci retracement around 9,828, and it seems as though the greenback may move sideways over the near-term as it breaks out of the upward trend from November. However, as the moving average crossovers [...]
Crude Oil, Gold Looking for Direction Amid Indecisive Risk Trends
Talking Points Crude Oil Adrift Along with SP500 Futures Ahead of Wall Street Open Gold Needs US Dollar to Pick Direction to Establish a Directional Bias WTI Crude Oil (NY Close): $100.36 // +0.57 // +0.57% Risk sentiment trends are adrift after yesterday’s sharp recovery, with traders apparently rethinking the implications of a 50bps swap rate cut from the world’s top central banks, clouding the outlook for crude oil prices. The US ISM manufacturing gauge headings the economic calendar, with expectations calling for the highest reading in five months. This may underpin prices in the absence of anything new out of the Eurozone, but the debt crisis clearly continues to preoccupy investors. On the technical front, prices are retesting support-turned-resistance at the bottom of a rising channel set from early October, now at 102.32. A break above this boundary exposes the November 17 high at 103.35. Support lines up at 94.56. Spot Gold (NY Close): $1746.38 // +30.65 // +1.79% Indecisive risk trends make for a convoluted outlook for gold as the metal continues to take its cues from the decisively sentiment-driven US Dollar. As with crude, the ISM reading may prove to be a catalyst, with a stronger outcome [...]
Euro, British Pound Correction On Tap Ahead of NFPs
Talking Points Euro: France’s Credit Rating Still At Risk, ECB Says Asset Purchases ‘Limited’ British Pound: BoE Turns Increasingly Cautious, Sees Risk Of ‘Systemic Crisis’ Euro: France’s Credit Rating Still At Risk, ECB Says Asset Purchases ‘Limited’ Although the EUR/USD advanced to a high of 1.3520 on Thursday, the single currency may consolidate going into the end of the week as it holds within the previous day’s range. Indeed, France sold EUR 1.57B of 10-Year bonds yielding 3.18%, which compares to the 3.22% offered back in November, but the ongoing turmoil in the financial system continues to instill a bearish outlook for the Euro as Europe’s second-largest economy faces a risk of a credit rating downgrade. Fitch Ratings’ head of sovereign rating, David Riley, warned France’s AAA credit rating may be at risk should the debt crisis intensify, and went onto say that the European Central Bank ‘is the only pan-European institution that can provide the bridge financing to the new euro zone’ as the EU struggles to nail out the details of leveraging the European Financial Stability Facility. In response, ECB President Mario Draghi said drawing up a ‘new fiscal compact’ is the most important step in restoring investor [...]
FOREX: Dollar May Rise as Traders Rethink Cental Banks’ Swap Rate Cut
Talking Points US Dollar Consolidates as FX Markets Digest Yesterday’s Volatility Surge Australian Dollar Falls as Chinese PMI Shows Manufacturing Contracted Risk Aversion to Return as Traders Rethink Central Banks’ Swap Rate Cut SP 500 Stock Index Futures Lower, Hinting Sentiment Turning Defensive The US Dollar was little changed against the major currencies as markets consolidated after yesterday’s breakneck volatility. The Australian Dollar underperformed, sliding as much as 0.8 percent against its top counterparts after Chinese Manufacturing PMI data fell short of expectations, showing the bellwether factory sector shrank for the first time since February 2009. China is Australia’s top export partner and a dent in demand for the country’s coal and iron ore foreshadowed by a contraction in the East Asian giant’s industrial sector naturally bodes ill for economic growth, interest rates, and thereby the exchange rate. Looking ahead, a re-evaluation of recent news-flow seems likely to put the brakes on the surge in risk appetite witnessed over the preceding 24 hours. Needless to say, the top catalyst for investors’ optimism was the announcement of a multilateral 50bps reduction in major central banks’ swap rates. Traders initially cheered the announcement, but its subtext seems altogether negative. A reduction in [...]
Currencies Well Bid But is the Price Action Warranted?
Markets consolidate following intense Wednesday move EUR/USD expected to hold below 1.3500 on a daily close basis Coordinated central bank action while welcome, should not be taken as risk positive Australian Dollar reverses course and underperforms Markets have mostly been locked in some consolidation following the massive surge in risk appetite on the back of Wednesday’s coordinated central bank action, and it now remains to be seen whether this recovery rally can be sustained. We contend that the rally will not be sustainable, and ultimately, we should once again see a resumption of risk liquidation, with currencies and equities under pressure and the US Dollar as the primary beneficiary. Look for EUR/USD to hold below 1.3500 on a daily close basis. The central bank actions on Wednesday only reinforce the severity of the global crisis and while necessary, should certainly not be taken as a risk positive. It is true that the actions of the central banks will make money cheaper and attempt to stimulate the global economy, but let us not forget that cheap money means nothing if it is still not accessible. This has been a major critique of these alternative forms of monetary policy measures, and at [...]
USD Posts Sharpest Decline of Month on Monster Dow Jones Rally
The greenback fell for a third consecutive day in North American trade with the Dow Jones FXCM Dollar Index (Ticker:USDollar) plummeting 1.08% on the session. News of a coordinated effort by global central banks to boost liquidity measures, stronger than expected US data, and a move to ease policy in China converged to spark a massive rally with equity markets surging across the board. US stocks were sharply higher at the close with the Dow, the SP, and the NASDAQ soaring 4.24%, 4.33%, and 4.17% respectively. Although the coordinated effort by the Fed, ECB, BoE, BoC, BoJ, and the SNB eased immediate concerns over a looming credit crunch, the move does little to address the underlying solvency issue that has continued to weigh broader market sentiment. The fact that these central banks have taken this bold step also suggests that officials see a growing risk of the possibility of another credit event as institutions look to shield themselves from the looming debt threat in Europe. Accordingly today’s rally is widely expected to taper off heading into the close of the week with investors looking ahead to Friday’s non-farm payroll report which is expected to show the addition of 125K jobs [...]
Crude Threatens November High
Daily Bars
Prepared by Jamie Saettele, CMT
“After exploding through the July high of 10057, crude reversed at the June high near 10330, forming a key reversal in the process. The key reversal and the excitement that surrounded the reversal su…
